The Market Went Nowhere. The Margin Loans Doubled.
On 3 March 2025, the Nifty closed at 22,119.
On 28 September 2026, it closed at 22,780.
Nineteen months. A 3% gain. And a lot of sleepless nights in between.
Over the same nineteen months, the money Indian investors borrowed from their brokers to buy shares went from ₹68,800 crore to ₹1.51 lakh crore.
The market barely moved. The loan more than doubled.
That gap is the whole story. And I don't think enough people are asking what it means.
Margin loans (left) vs Nifty 50 (right), September 2023 to September 2026. Source: NSE MTF disclosures.
First, what is MTF?
MTF stands for Margin Trading Facility. Your broker lends you money to buy shares. The shares you buy sit with the broker as collateral. And you pay interest for every day you hold, typically around 12% to 15% a year at the big brokers.
There's no expiry date. No option chain. No theta eating your premium. It looks and feels like investing.
That's exactly what makes it dangerous. It behaves like leverage.
If the stock falls far enough, your margin thins out and the broker asks you to top up. If you can't, they sell for you. At whatever price the market is offering that day.
Zoom out, and it gets wilder
At the end of 2020, the total MTF book on NSE was about ₹7,467 crore. In FY23, it was around ₹25,000 crore. Today it's ₹1.51 lakh crore, on NSE alone.
That's 20x in under six years.
The Nifty, over the same stretch, went from about 14,000 to about 22,800. Roughly 1.6x.
The borrowing grew 20x. The market it was borrowed to buy grew 1.6x.
Since 2018: from about ₹3,500 crore to ₹1.51 lakh crore. Source: NSE MTF disclosures.
The last two months are the part that bothers me
On 3 August 2026, the Nifty was at 24,774 and the MTF book was ₹1.38 lakh crore.
By 28 September, the Nifty had fallen 8% to 22,780. The MTF book had risen 9% to ₹1.51 lakh crore. An all-time high.
Read that again. Seven straight losing weeks for the index, and the borrowed money kept walking in.
When prices fall and leverage rises at the same time, every new rupee of loan sits on a thinner cushion. These positions aren't getting safer. They're getting closer to the edge.
Last three months: the index falls, the borrowing climbs. Source: NSE MTF disclosures.
So where is all this money coming from?
I see three forces at work, and they feed each other.
The F&O crackdown pushed speculation sideways, not out. SEBI tightened the rules on derivatives, and STT on F&O went up. Fewer individuals trade options now. But the appetite for leverage didn't disappear. It just changed counters. MTF gives you leverage without the expiry-day drama, so that's where a lot of it went.
Brokers have every reason to offer more of it. When F&O volumes shrink, interest on margin loans makes a very comfortable replacement income. That's just business. But have you noticed how the MTF button keeps getting bigger and brighter on every trading app?
Buy-the-dip has become a reflex. A whole generation of investors has watched every fall since 2020 turn into a recovery. COVID. 2022. Early 2025. Every dip got bought, and buying it worked. So why not buy this one too, with a little extra?
That's the logic. And it works right up until the dip doesn't bounce on schedule.
Someone was selling. Look who.
Here's the uncomfortable math. If buyers borrowed an extra ₹81,500 crore and the index still went nowhere, someone was selling into all that buying.
Foreign portfolio investors pulled ₹1.66 lakh crore out of Indian equities in 2025. In 2026, they've taken out about ₹2.45 lakh crore more, as of mid-September.
Domestic money absorbed it. SIPs, mutual funds, and a growing slice of retail investors buying on credit.
One side is selling with its own money. The other side is buying with borrowed money.
Only one of them gets margin calls.
It isn't a handful of stocks
Look at what happened in some of India's biggest names over the last three months.
29 June to 28 September 2026. How buyers are funded, not a view on the companies. Source: NSE.
BSE fell 20% while margin loans in it grew 2.5x. HDFC Bank fell 10% and margin loans grew 1.8x. Maruti fell 10.5% and margin loans grew 2.4x. Reliance fell 8% and margin loans grew 34%.
To be clear, this says nothing about these companies. It's about how the buyers are funding their positions.
And it goes well beyond the large caps. In the past month alone, 603 stocks fell while margin money in them rose. Only 220 went the other way.
1,699 NSE stocks with margin loans, 28 August to 28 September 2026. Source: NSE.
Roughly half of the entire MTF book now sits in stocks that aren't even in the F&O segment. That's usually the thinner, less liquid end of the market. The kind of stocks where everyone discovers the exit is narrow at the same moment.
Some of it is almost poetic. Margin loans against the silver ETF are up about 25x since March 2025. Our grandmothers bought silver with cash and kept it in a steel dabba. We buy it on a 14% loan through an app.
And margin loans in the Nifty ETF rose 48% last month while the ETF itself fell 5.5%. Buying the index on a 14% loan has to be the most Indian way to be a passive investor.
Why leverage changes the shape of a fall
A loan doesn't shrink when the price does. That's the whole problem in one line.
The stock falls. The margin thins. The broker calls. No cash means a forced sale. That forced sale pushes the price down a little more, which triggers the next person's call. And the next.
Leverage rarely starts a fall. It decides how ugly the exit gets.
We've already seen the trailer this year. Between mid-January and early April 2026, as the Nifty slid from about 25,700 to below 22,500, the MTF book shrank by roughly ₹10,000 crore. Not all of that was voluntary.
Since that low on 6 April, the book has grown 43%. And the Nifty on 28 September was lower than it was that day.
The meter is always running
At typical rates of 12–15%, a ₹1.5 lakh crore book costs investors roughly ₹18,000–22,500 crore a year in interest.
The Nifty's one-year return as of 28 September: −7.6%.
Paying double-digit interest to hold a market that's down over the year takes a special kind of optimism.
Markets can go sideways for years. Loans don't care. Every single day you hold, the meter runs.
What I'm watching
This isn't a crash call. I don't know when this resolves, and neither does anyone who tells you they do.
But the signal is simple. When the MTF book rises while the Nifty falls, people are still adding. When both fall together, that's the unwind.
It has already started in pockets. Last month, 653 stocks saw their price and their margin loans fall together. If that becomes the dominant pattern across the market, pay attention.
If you use MTF yourself, ask three questions before you add another rupee:
- How far would this stock have to fall before I get a margin call?
- Do I have the cash to meet that call without selling something else?
- Would I still buy this if I had to pay for it in full?
If the honest answer to the last one is no, the loan isn't helping you invest. It's helping you hope.
This is commentary on publicly available data, not investment advice. Data: NSE Margin Trading Facility disclosures and NSE closing prices, as of 28 September 2026. FPI flows from NSDL/CDSL as reported by PTI. Interest cost is an estimate based on typical broker rates.
I post shorter takes like this on X. Follow me at @jairaj_ajay.